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Citigroup, Inc. (NYSE: C) is still in a pinch despite more than a 100% bounce from recent lows, and its still-relatively new CEO is caught right in the middle of a storm he might not escape. This call comes with some mixed emotions because what is obvious is that Vikram Pandit has been trying to make this horrible banking year and this horrible environment as painless for the company’s employees and to the corporate environment as he could. Making the decision to layoff the same amount of jobs as many small cities have in their entirety is no easy task. We have also heard after asking around how Pandit is not a slash and burn CEO. Whether anyone agrees that the financial supermarket model works or not is now irrelevant since every other "in the club" government-backed banks now mirrors the Citi model that was criticized for years.
Posts for Ticker ‘WB’
10 CEOs To Go For 2009: Vikram Pandit of Citigroup (C, WFC, WB)
Market Assuming Citigroup (C) Will Go The Way Of AIG (AIG) Or Wachovia (WB)
The market is treating Citigroup (C) as if it knows something about the bank’s near-term fortunes and that something is not good. Shares in the bank have been off 21% to $6.60. What is remarkable is that the stock traded over $10 just four days ago.
Citi’s announcement that it would acquire the remaining assets of the SIVs it manages at current fair value should not have caused the drop. If the contents of these were remarkably toxic, Citi would have disclosed that.
The firm’s decision to fire 53,000 more people is unfortunate, but it would usually be a modestly positive piece of news.
Wells Fargo Offering Larger Than A Super-IPO (WFC, WB, BRK-A)
Wells Fargo & Company (NYSE: WFC) has priced that monster share offering. Rather than $10 billion being raised, it is more like $11 billion. The banking giant priced 407.5 million shares at $27.00 per share. The stock closed down 9% today on the news that the offering was coming. It closed down about 8.5% yesterday in the post-election selling. And shares are down 4.7% in after-hours trading at $27.40 tonight.
Barclays (BCS) Shows Why Taxpayer Bailouts Are Junk
Barclays (BCS) turned down cash from the UK government. Unlike most large US banks, it did not want to trade independence for money. Companies such as Goldman Sachs (GS), JP Morgan (JPM), and Citigroup (C) will now have the Treasury looking through their underwear drawers for excessive executive compensation, accounting practices, and ski trips.
Financial Crisis Cost Moves Toward $25 Trillion
No one with an abacus, a calculator, or a mainframe will ever know what the global credit crisis has cost in real money. Lost jobs means lost tax revenue. Lost bank capital means a drop in share values. Government aid must be near $1.5 trillion when the US’s $700 billion is added to what all other nations have put in to shore up banks.
Companies Beyond Financial Sector Want Bailout Cash, A Bad Idea (C)(WFC)(NCC)(WB)
Too many mouths to feed. Someone will have to starve.
Now that Henry Paulson has $700 billion and some discretion about how to spend it companies from car manufacturers to airlines want a piece. So do some municipalities. Insurance companies are already in the "salvation system", or at least AIG (AIG) is. But, its $123 billion came from a pot all of its own.That means Treasury has a bit more money.
The Shorts Get Out Of Banks And Into Tech (C)(WFC)(WB)(BAC)(MBI)(AIG)(INTC)(MSFT)(ORCL)(DELL)(QCOM)(SIRI)(F)
For the period ending October 15, short sellers got out of most banks and brokerage stocks. That is a shame for them. They could have made a killing this week.
The short interest in Citigroup (C) fell over 5% to 116.8 million shares. Probably due to its purchase by Wells Fargo (WFC) shares sold short in Wachovia (WB) dropped by 54% to 91 million. Short interest in Bank of America (BAC) dropped 14% to 94.1 million. Short interest in MBIA (MBI) fell 21% to 62 million.
The government bailout did not do much for AIG (AIG) is was the only big financial to see a sharp increase in shares sold short, up up 11% to 93.7 million.
What The NCC (NCC) Deal Says About Bank Balance Sheets
NCC (NCC) was bought today by PNC in what most people would view as a classic "takeunder" The price of the deal was well below where the shares traded yesterday.
NCC’s stock is down 20% on the news. PNC will pay a total of $2.23 a share or $5.58 billion.
The government had a hand in the deal and probably even forced it. PNC says it received a $7.7 billion investment from the government, under its $750 billion bailout plan.
The amount of the write-offs when the deal is done will be extraordinary. PNC’s CEO said $19.9 billion of losses on the National City portfolio will come in as write-downs at the time the acquisition closes.
That says a great deal about major US bank balance sheets. Wachovia (WB) reported a third-quarter loss of $23.9 billion on Wednesday, which say a mouthful about that state of its financials. Under the provisions of its merger deal with Wells Fargo (WFC), it was required to fess up to everything bad it could find. According to Reuters, loan losses from Wachovia could hit $74 billion.
Odd that the really big write-offs only get exposed when these firms are bought. It is almost as if those banks which are still independent are moving a bit slowly in getting all of their cards onto the table.
Douglas A. McIntyre
Recession Deepens: Another Five Million Unemployed And Bottom Fishing Becomes An Art
No matter where economists look there is no evidence that a recession in the US, EU, and Asia is doing anything but deepening. The stock markets are the least of it. Some of the indexes in the largest countries are off 40% from their peaks reached a year ago. Banks are failing. In cases where the government has not stepped in some have disappeared and others have been merged into more healthy institutions. Healthy for now, that is.
The financial sector could easily lose several hundred thousand jobs in the US. New York City expects employment in the banking and brokerage sector to fall by 150,000. Marriages like the ones between Bear Stearns and JP Morgan (JPM) and Wachovia (WB) and Wells Fargo (WFC) will clearly put tens of thousands of people out of jobs. Goldman Sachs (GS) apparently will let 10% of its workers go.
Wachovia (WB): Being In Banking Gets Worse
It is a good thing Wachovia (WB) will not have to go it alone. It would not make it.
Wachovia reported a net loss in the third quarter of 2008 of $23.89 billion, representing a net loss per share of $11.18, including a provision for credit losses of $6.63 billion to cover $1.87 billion in net charge-offs and to build reserves by $4.76 billion.
Wells Fargo Looking More and More Like The Old Citigroup Model (WFC, WB, C)
Wells Fargo & Co. (NYSE: WFC) is the latest of the banking giants to look like the old Citigroup Inc. (NYSE: C) business model. This became the case with the acquisition of Wachovia Corp. (NYSE: WB) out from under Citi’s, but today Wells Fargo is making another acquisition. The company’s Wells Fargo Insurance Services announced that it has acquired New Jersey-based EMAR Group, one of the nation’s largest independently owned commercial insurance agencies with offices in New Jersyey, New York, and Florida.
Media Digest 10/13/2008 Reuters, WSJ, NYTimes, FT, Bloomberg
According to Reuters, world markets are waiting to see how the bailout of banks in Europe and the US will work.
Reuters reports that Japan’s Mitsubishi UFJ Financial Group is looking for more favorable terms in its $9 billion buy-out of Morgan Stanley (MS).
Reuters reports that the UK will put $64 billion into its major banks.
Reuters writes that Wells Fargo (WFC) won Fed approval for its Wachovia (WB) takeover.
Merrill Lynch (MER), Wachovia (WB), And Morgan Stanley (MS) Deals Could Fail
A few days ago, it would have been nearly impossible to believe that the deals for Bank of America (BAC) to buy Merrill Lynch (MER), for Mitsubishi UFJ to buy 20% of Morgan Stanley (MS), or for Wells Fargo (WFC) to buy Wachovia (WB) could fall apart.
That may have changed in the last 24 hours. Moody’s has warned it may cut the long-term debt ratings of Morgan Stanley (MS) and its stock has been down as much as 30% during several of the most recent trading sessions. It closed yesterday at $12.45.
Media Digest 10/10/2008 Reuters, WSJ, NYTimes, FT, Bloomberg
According to Reuters, the US is looking at guaranteeing billions of dollars of bank debt and temporarily insuring all bank deposits.
Reuters reports that Citigroup (C) has ended talks about taking over Wachovia (WB), leaving Wells Fargo (WFC) free to conclude a deal.
Reuters writes that AIG (AIG) has borrowed $70 billion of the US government loans available to it.
Citigroup (C) And Wells Fargo (WFC) Find A Cowpie On Wachovia’s (WB) Books
The most wonderful thing about the current financial crisis is that it is a monument to human optimism. Every day executives and government officials signal that things may be getting better. Everyday they get worse.
There is no better example of this than the land-grab that is going on between Citigroup (C) and Wells Fargo (WFC) to get the retail system and other assets of Wachovia (WB). As it turns out, after a close look, the Wachovia balance sheet is uglier than expected.
Paulson’s New Bailout Plan: The Trouble With Owning Bank Shares
Henry Paulson watched the Brits come up with a new plan to save the banking system before he did. He is probably embarrassed by that. He and Bernanke seemed to have a big lead over everyone else in building Lego models for saving the financial world.
The latest idea if for the Treasury to actually buy equity in banks thereby mainlining capital into large financial institutions in the hope that they will then lend that money out.
Media Digest 10/9/2008 Reuters, WSJ, NYTimes, FT, Bloomberg
According to Reuters, the US Treasury may buy interests in large banks following the model set up by the UK.
Reuters reports that IBM’s (IBM) earnings strength helped calm tech investors.
Reuters reports that MetLife (MET) and The Hartford (HIG) may be in merger talks.
Media Digest 10/8/2008 Reuters, WSJ, NYTimes, FT, Bloomberg
According to Reuters, US markets fell to five-year lows.
Reuters writes that Wells Fargo (WFC) could end up with over 75% of Wachovia;s (WB) deposits.
Reuters reports that Morgan Stanley’s (MS) deal to get capital from Mitsubishi UFJ was approved by the government but MS shares fell as much as 35% on concerns about the deal.
Media Digest 10/7/2008 Reuters, WSJ, NYTimes, FT, Bloomberg
According to Reuters, Bank of America (BAC) reported weak earnings and cut its dividend.
Reuters reports that Wells Fargo (WFC) and Citigroup (C) agreed to drop litigation for now and negotiate over a deal to buy Wachovia (WB).
Reuters reports that members of the Fed are divided on a rate cut.
Citi’s Wachovia Suit & Stock Halt, Adding Mud To The Swamp (WB, C, WFC)
Wachovia Corp. (NYSE: WB) shares were halted for "NEWS PENDING" because of an announcement coming out of Citigroup (NYSE: C). The Citi and Wells Fargo (NYSE: WFC) war may be heating up above and beyond a normal fight. Shares were down over 7% at $5.73 on the halt and more than 49 million shares have traded hands. The news is that Citi is going to sue Wells Fargo and Wachovia for bad faith and breach of contract. But the amount is almost absurd and you would almost wonder where the math came from. Citi is seeking $60 billion in damages.
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